2022年上海對(duì)外貿(mào)易院財(cái)管中加財(cái)務(wù)報(bào)表分析課后練習(xí)答案chacha本

1、上 海 對(duì) 外 貿(mào) 易 學(xué) 院 財(cái) 管 中 加 財(cái) 務(wù) 報(bào) 表 分 析 課 后 練 習(xí) 答 案 c ha 3 c ha 4 第 1 頁,共 22 頁學(xué)習(xí) 好資料 Cha 3 5.La. i Statement of Cash Flows - Indirect Method Cash from operations: Net income 600 $1,080 Add noncash expense: depreciation Add/Subtract changes in working capital:150 150 Accounts receivable Inventory 200 Acc

2、ruals 80 Accounts payable 120 $1,530 Cash from investing: Capital expenditures 1,150 Cash from financing: Short term borrowing 550 Long-term repayment 398 Dividends 432 $280 Net change in cash $ 100 Worksheet for Indirect Method Cash Flow Statement Net income Income Balance Sheet Change Cash Stateme

3、nt $1,080 12/31/00 12/31/01 Effect $1,080Depreciation Accounts receivable Inventory 600 $1,500 2,000 $1,650 2,200 $150 200 600 150 200 Accruals600 800 880 80 80 Accounts payable 1,200 1,320 120 120 Depreciation 600 550 6,500 7,050 550 Net fixed assets Capital expenditures $1,150 精品資料 第 2 頁,共 22 頁學(xué)習(xí)

4、好資料 Note payable 1,080 5,500 6,050 550 550 Short-term borrowing $ 550 Long-term debt Long-term debt repayment 2,000 1,602 398 398 $ 398 Net income 500 1,148 648 1,080 Retained earnings 648 Dividends paid $ 432 0$ 100 The worksheet to create the cash flow statement is presented above. Each balance sh

5、eet change other than cash is accounted for and matched with its corresponding activity. As a last check, the net income and the add-backs of non-cash items are balanced and and retained earnings providing dividends. “ closed ” to their respective accounts PP&E the amounts of capital expenditures an

6、d a. ii Statement of Cash Flows - Direct Method Cash from Operations: Cash collections Cash payments for merchandiseCash paid for SG&A Cash paid for interest Cash paid for taxes $9,850 6,080 920 600 720 $1,530 Cash for Investing Activities: Capital expenditures 1,150 Cash for Financing Activities: S

7、hort-term borrowing 550 Long-term debt repayment 398 Dividends 432 $ 280 Net Change in Cash $ 100 The worksheet to create the cash flow statement is presented below. Each balance sheet change other than cash is accounted for and matched with its corresponding activity. Furthermore the operating acco

8、unt changes are matched to their corresponding income statement item. As a last check, the net income is balanced and “ closed ” to retained earnings providing the amount of dividends. 精品資料 第 3 頁,共 22 頁學(xué)習(xí) 好資料 Note that there is no difference between the indirect and direct methods in the cash flow s

9、tatement and in the worksheet for cash for investing and financing activities, 精品資料 第 4 頁,共 22 頁學(xué)習(xí) 好資料 Worksheet for Direct Method Cash Flow Statement Change Cash Income Balance Sheet Sales Accounts receivable Cash Collections Statement $10,000 12/31/00 12/31/01 Effect $10,000 150 $ 9,850 $ 1,500 $

10、1,650 $ 150 COGS Inventory Accounts payable 6,000 2,000 1,200 2,200 1,320 200 120 6,000 200 120 Cash Paid for Merchandise $6,080 SG&A expense Accruals 1,000 800 880 80 1,000 80 Cash Paid for SG&A $ 920 Interest expense Cash Paid for Interest 600 $600 600 Taxes 720 550 720 Cash Paid for Taxes $720 De

11、preciation Net fixed assets 600 6,500 7,050 600 550 Capital Expenditures $1,150 550 Note payable Short-term Borrowing 5,500 6,050 $550 550 Long-term debt Long-term Debt Repaid 2,000 1,602 398 398 $ 398 Net income 1,080 648 1,080 Retained earnings Dividends 500 1,148 648 $ 432 $ 0 $ 100 精品資料 第 5 頁,共

12、22 頁學(xué)習(xí) 好資料 6.La. Exhibit 3P-3 does not provide the changes in the individual components that make up the changes in working capital. As such, to create the direct method cash flow statement, we must obtain the information directly from thebalance sheet. This procedure does not necessarily yield the

13、same cash flow components using the direct method as those provided by the company in its indirect method calculations. Differences may arise when 1. there are acquisitions/divestments 2. there are foreign exchange adjustments3. the firm aggregates or classifies investing accruals together with oper

14、ating ones. In this case, the differences are minimal as indicated below. The calculations required for the direct method cash flow statement are presented in Exhibit 3S-1 along with the assumptions used to generate the statement Direct Method Cash Flow Statement Exhibit 3S-1 $348,627 Indirect Metho

15、d Exhibit 3P-3 Difference Cash collections Cash for suppliers Cash expenses 246,100 94,791 $4,398 $ 162 Interest paid 5,303 Tax paid 2,127 $ 4,560 CASH FROM OPERATIONS CASH FROM INVESTMENTS 4,251 4,089 162 CASH FROM FINANCING 215 215 CHANGE IN CASH $524 $ 524 精品資料 第 6 頁,共 22 頁學(xué)習(xí) 好資料 Exhibit 3S-1: Di

16、rect Method Statement of Cash Flows Income Balance Balance Change Cash Effect Statement SheetSheet2022 12/31/00 6/30/2022 Sales $342,215 91,636 85,224 6,412 $ 342,215 Accounts receivable 6,412 Cash collections 163,206 158,451 4,755 $ 348,627 Cost of goods sold 238,799 238,799 Inventories4,755 Accoun

17、ts payable 84,734 72,678 12,056 12,056 Cash inputs 1,426 1,843 417 $246,100 Operating expenses 91,795 91,795 Other current assets 417 Prepaid expenses & other assets 55,566 56,630 1,064 1,064 Accrued expenses*17,679 16,299 1,380 1,380 Postretirement benefit obligation 2,265 2,130 135 135 Cash expens

18、es $ 94,791 Interest expense 5,128 175 0175 5,128 Interest payable* 175 Interest paid 4,116 2,889 1,227 $5,303 Tax expense 831 831 Income tax receivable1,227 Income tax payable1,130 2,383 1,253 1,253 Deferred income taxes 18,096 18,574 478 478 Tax paid 91,108 90,966 142 $2,127 CASH FLOW FROM OPERATI

19、ONS 4,560 Depreciation expense 4,732 4,732 Fixed assets 142 Investments in joint ventures9,714 9,591 123 123 Minority interest 971 1,187 216 216 CASH FLOW FROM INVESTMENTS 3,425 3,425 -$4,251 Current portion of long-term debt 0Long-term debt161,135 165,799 4,664 4,664 Dividends paid* 4,461 Other - c

20、hange in stockholders equity12 CASH FLOW FROM FINANCING $215 Net Income check 930 $524 Net change in cash * Assumed change in interest payable to conform to interest paid. * From the indirect method b. 1st 6 Months1996 1997 1998 1999 2022 2022 Totals 精品資料 第 7 頁,共 22 頁學(xué)習(xí) 好資料 CFO CFI CFF $34,915 $ 5,1

21、65 $23,528 $73,597 $18,606 $4,560 $ 76,103 38,007 42,977 46,767 13,500 9,017 4,251 154,519 $3,092 $37,812 $70,295 $60,097 $27,623 $ 309 $78,416 4,230 38,782 70,474 60,473 27,124 215 80,352 As noted in Box 3-2, from 1996 to 2022, the company generated free cash flow CFO less net capital expenditures

22、of million, during the first six months the A. M. Castle addedanother $309 thousand. However, Box 3-2 also showedthat over the five-year period, Castle paid nearly $50 million in dividends andborrowed nearly $130 million to finance its investmentsand acquisitions. This trend continued in the first s

23、ix months of 2022 during which the firm borrowed an additional million to help pay its dividends and meet capital expenditure needs. Cash generated from operations from 1996 through the end of the first 6 months of 2022 was $76 million but the company spent $154 million to replace productive capacit

24、y and for investments and acquisitions. When free cash flows is calculated on this basis i.e. CFOCFI there is a shortfall of $78 million. This shortfall as well as dividend payments were financed by borrowing over the same period. The inability to meet its capital and dividend needsfrom operations c

25、learly indicated that either the dividend would have to be reduced or the company would not be able to remain competitive and/or grow as needed. 9.LThe cash flow statement shows a steady deterioration in CFO; albeit CFO remains positive. Income before extraordinary items on the other hand increases

26、steadily at approximately 8%-10% per year. To explain the discrepancy between the pattern of income and CFO, we first compute the direct method cash flow statement and then compare the cash flow components with their income statement counterparts. The abbreviated cash flow statement under the direct

27、 method is presented below: 1992 Years Ended December 31 1993 1994 精品資料 第 8 頁,共 22 頁學(xué)習(xí) 好資料 Cash from operating activities: $2,119,563 1,502,414 453,449 $2,420,961 1,742,149 523,474 $ 2,744,159 2,064,815 601,575 Collections from customers Payments for merchandisePayments for SG&A Interest paid Taxes

28、paid 37,883 12,414 33,367 22,989 33,948 8,408 Other plug 13,263 $ 100,140 247 $ 98,735 4,619 $ 30,794 Cash for investing activities: Capital expenditures Acquisition of leaseholds $48,878 30,602 85,480 $110,534 21,894 132,428 $90,009 8,025 98,034 Cash for financing activities: Long-term borrowings 3

29、,276 23,831 19,432 Revolving credit borrowings 70,243 Proceeds from sale of stock, options and 1,995 54,460 1,050 warrants $ 1,281 $ 30,629 $ 51,861 Net change in cash $ 13,379 $ 3,064 $ 15,379 The required calculations for the operating items are presented in Exhibit 3S-2 on page 21. The last item

30、“ other ” is the plug amount used to arrive at the CFO presented in the indirect cash flow statement Exhibit 3P-4. 精品資料 第 9 頁,共 22 頁學(xué)習(xí) 好資料 Exhibit 3S-2 Worksheet for Operating Items for Direct Method SoCF Sales Change in receivables Cash Collections 1992 1993 1994 $ 2,127,684 8,121 $ 2,119,563 2,414

31、,124 6,837 2,420,961 $ 2,748,634 4,475 $ 2,744,159 COGS Change in inventory Change in accounts payable Payments to Suppliers 1,527,731 28,401 1,742,276 60,893 1,975,332 82,863 53,718 $1,502,414 61,020 $1,742,149 6,620 $2,064,815 SG&A expense Change in prepaid expenses Change in accrued wages Payment

32、s for SG&A $458,804 1,317 4,038 453,449 $520,685 2,137 652 523,474 $605,538 3,358 7,321 601,575 Interest expense Amortization of debt issuance costs Interest paid $39,934 2,051 37,883 $34,904 1,537 33,367 $34,948 1,000 33,948 Tax expense 25,507 26,152 27,569 Change in taxes payable Deferred taxes Ta

33、xes paid $9,003 4,090 12,414 $2,662 501 22,989 $17,567 1,594 8,408 精品資料 第 10 頁,共 22 頁學(xué)習(xí) 好資料 The comparison of the cash flow and income statement components is presented below: Sales 1992 1993 1994 %change %change %change 1992-93 1993-94 1992-94 2,127,684 2,414,124 2,748,634 13.5% 13.9% 29.2% Cash co

34、llections 2,119,563 2,420,961 2,744,159 14.2% 13.3% 29.5% Collections/Sa 99.61% 100.28% 99.84% les COGS 1,527,731 1,742,276 1,975,332 14.0% 13.4% 29.3% Payments to suppliers 1,502,414 1,742,149 2,064,815 16.0% 18.5% 37.4% Payments/COGS 98.34% 99.99% 104.53% 13.5% 16.3% 32.0% SG&A expense 458,804 520

35、,685 605,538 Payments for SG&A 453,449 523,474 601,575 15.4% 14.9% 32.7% Payments/SG&A 98.83% 100.54% 99.35% Credit and collections do not seem to be responsible for the deterioration in CFO. A comparison of cash collections with sales indicates that collections increased at a slightly faster pace t

36、han sales. The collections/sales ratio increased from 99.61% in 1992 to 99.84% in 1994. Inventory, however, is another matter. Payments for inventory increasedby 37% whereas COGS increasedby only 29%. This is indicative of inventory being bought and paid for but not being sold. The proportion of pay

37、ments to COGS increasedaccordingly from 98.3% to 104.5% in two years. This 6% increasetranslatesbased on COGS of close to $2,000,000 to an increased annual cash requirement of $120,000. Thus, the first cause of Radloc s problems seems to be inventories. Its income may be overstated as inventory may

38、have to be written down if it cannot be sold. Even if inventory is eventually sold and the purchases now being made now are able to satisfy future growth, the firm may still face liquidity problems as it requires cash to purchase and carry the new inventory. However, as CFO is still positive the fir

39、m may still be a good candidate for credit. 精品資料 第 11 頁,共 22 頁學(xué)習(xí) 好資料 Further insights as to the impact of growth can be seen if we compare free cash flow CFO - CFI with income and CFO. Earnings before extraordinary iCteFmOs 1992 $37,262 100,140 1993 $41,378 98,735 1994 $44,359 30,794 Free Cash Flow

40、14,660 33,693 67,240 150,000 100,000 1993 1994 Earnings before50,000 extraordinary items CFO -Free Cash Flow s 1992 50,000 100,000 Although income rises, CFO and free cash flow fall. CFO exceeds income in 1992 and 1993 as the noncash depreciation addback increases CFO relative to income. By 1994, ho

41、wever, CFO, although positive falls below income. This indicates that the firm may have problems in covering the replacement of current productive capacity. Free cash flowisnegativein1993and1994and“ barelyp”ositivein1992.This indicates that the firm s growth in addition to inventory requires cash th

42、at Radloc cannot supply internally. Where did the cash come from. In 1993, it met its cash requirements by issuing stock; in 1994 the firm term debt increased considerably as it drew down its revolving credit lines. s short Thus, the loan should not be granted as the firm increasing liquidity crisis

43、. seems to be facing an Note: Radloc is an anagram for Caldor, a chain of discount stores. The data in Exhibit 3P- 4 were taken from Caldor s published financial statements. Caldor filed for Chapter 11 bankruptcy soon after the 1994 statements were published. Cha 4 8.La. Company 1Industry Chemicals

44、and drugs Monsanto 精品資料 第 12 頁,共 22 頁學(xué)習(xí) 好資料 b. 2Aerospace Boeing 3Computer software Altos Computer4Department stores J.C. Penney5Consumer foods Quaker Oats 6Electric utility SCEcorp 7Newspaper publishing Knight Ridder 8Consumer finance Household Finance9Airline AMR Corp. The airline, consumer financ

45、e, and electric utility industries are service industries. They are characterized by the absence of cost of goods sold and inventories. Companies 6, 8, and 9 have the lowest ratios COGS/sales and inventories/total assets. Newspaper publishing may also be considered a service industry; we will return

46、 to this later. Company 8 is the consumer finance company. It has a high level of debt balanced by a high level of receivables and investments loans and securities. Much of its debt is short-term, reflecting the short maturities of its loans. It has almost no fixed assets. The ratio of interest expe

47、nse to revenues is the highest for this company. Both the electric utility and airline firms would have high fixed assets; utilities generally have higher assets lower asset turnover, are more profitable, and have higher debt and interest expense. Airlines, on the other hand, have high current liabi

48、lities for trade payables payments to suppliers and for advance ticket sales other current liabilities. We conclude that company 6 is the electric utility airline. and company 9 is the Companies 1, 2, and 3 have high R&D expense, consistent with the aerospace,chemicals and drugs, and computer softwa

49、re industries. Aerospace would have the highest inventory low inventory turnover. Customer prepayments under long term contracts result in lower receivables and large customer advances other current liabilities. Therefore, company 2 is the aerospace firm. 精品資料 第 13 頁,共 22 頁學(xué)習(xí) 好資料 Distinguishing comp

50、any 1 from company 3 is difficult. Computer software and drugs are both characterized by high R & D. The inclusion of chemicals, however, should lower the intensiveness of R&D, suggesting that company 3 is the computer software firm. Computer software, lacking manufacturing, is less capital intensiv

51、e than chemicals and drugs and the latter is generally more profitable.Further, the chemical industry being older should have older plant greater proportion depreciated. Company 1 is, therefore, the chemical and drugs firm and company 3 is in the computer software industry. Companies 4, 5, and 7 rem

52、ain. Company 4 has high inventories and COGS, the highest receivables relative to assets, and high asset turnover, all of which suggest a retailer. It has no R&D, high advertising expense, and low pretax profit margins. Company 4 is the department store firm. Company 5 has high net property relative

53、 to assets,and the highest ratio of advertising to revenues. Company 5 must be the consumer foods company. Company 7 is the newspaper publisher. It has very low inventory but high cost of goods sold; inventory is primarily newsprint while cost of goods sold includes the high cost of reporting and pr

54、oduction. Company 7 has the highest intangibles newspaperspurchased and very high pretax profit margins most newspapershave only indirect competition. This exercise was intended to show that industries have balance sheet and income statementcharacteristics that set them apart from others. These char

55、acteristics are often used to compare firms within an industry e.g. advertising as a percentage of sales for consumer goods firms. Summarized data should be used with caution, however. Different firms even in the same industry classify identical items differently. Thus the analyst should examine ori

56、ginal financial statementsto achieve better comparability. Differences among firms may be due to operational or classification differences. When managementis available to answer questions, these differences are often useful starting points for obtaining a better understanding of the firm. 精品資料 第 14

57、頁,共 22 頁學(xué)習(xí) 好資料 18.Ma. Income/equity 1997 1998 1999 $2,664/$12,766 $603/$11,833 $1,177/$12,042 = ROE = 20.87% = 5.10% = 9.77% b. Operating margin EBIT/sales 1997 1998 1999 8.51% 3.64% 5.96% X Interest burdenEBT/EBIT X Tax burden Net income/EBT X Asset turnover Sales/assets 20.78% 5.05% 9.75% X Levera

58、ge Assets/equity = ROE Note that, due to rounding errors, the ROEs calculated above are slightly lower than ROE calculated directly as net income/ending equity. Operating margin, and asset turnover are the prime factors responsible for the changes in ROE. The interest burden contributed somewhat to

59、the drop in ROE in 1998. Leverage assets/equity and the tax burden are relatively constant over the three years. b. Operating leverage effect OLE = % change in EBIT / % change in sales. For 1998 = $1,124 -$3,847/$3,847/$30,910 -$45,187/$45,187 = For 1999 relative to 1997 = $2,083 -$3,847/$3,847/$34,

60、975 -$45,187/$45,187 OLE is similar for both years. reflects the impact of fixed costs on profits as a result of changes in volume. Thus, for companies such as Texaco with high OLE, sales volume decreases impact profit margin percentages.Thus, the activity component and the operating margin componen